Kazakhstan may issue sukuk next year – c.bank chief

Oct 28. Reuters. DUBAI


Kazakhstan may issue sukuk next year - c.bank chiefKazakhstan may make its second international issue of sukuk next year following its successful sale of $2.5 billion worth of conventional eurobonds earlier this month, its central bank governor said.

In the wake of the eurobond issue, it would be “sensible” to seek to issue sovereign or quasi-sovereign sukuk in 2015, Kairat Kelimbetov told Reuters late on Monday in Dubai, where he is attending an Islamic finance conference.

The issue would probably be quasi-sovereign but plans have not been finalised yet; details are likely to be decided near the end of this year, Kelimbetov added.

A 240 million Malaysian ringgit ($73 million), five-year sukuk issue by state-owned Development Bank of Kazakhstan in 2012 was the first Islamic bond issue from a former Soviet state.

Since then, progress in developing Kazakhstan’s Islamic finance sector has been slow, partly because the government declares itself to be secular and officials do not want to appear overtly religious. But under Kelimbetov, who was appointed in October last year, efforts have been accelerating.

A draft Islamic banking law is expected to be finalised by the end of this year, Kelimbetov said. The new law would make it easier for conventional banks to convert themselves into sharia-compliant ones, bankers have said previously.

In May last year, the private investment arm of the Jeddah-based Islamic Development Bank said it planned to invest up to 35 percent of the subscribed and paid-up capital of Zaman Bank to convert it into Kazakhstan’s second Islamic bank.

Zaman’s conversion is expected to be completed by the end of this year, Kelimbetov told Reuters.

The central bank is seeking to join the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions and the International Islamic Financial Market, two international bodies which promote Islamic finance, he added.